Author Topic: Next state to stop Income Tax?  (Read 3135 times)

Weathering

  • 5 O'Clock Shadow
  • *
  • Posts: 81
Next state to stop Income Tax?
« on: June 04, 2017, 08:42:32 PM »
Does anyone have thoughts on which state(s) will be the next to abolish their income tax?
About 5 years ago I heard that NC was headed toward state income tax, but I think the political climate has changed there. I'm interested because I'd like to buy land in a state which is trending toward no state income tax (I think the state will grow significantly once a chance like that is made).

jwright

  • Bristles
  • ***
  • Posts: 269
Re: Next state to stop Income Tax?
« Reply #1 on: June 05, 2017, 09:29:03 AM »
I have no idea, but I would assume more states would trend to implementing or increasing state income tax with all of the federal budget cuts coming.  Hasn't it been rumored for awhile that WA will implement an income tax?

Morning Glory

  • Magnum Stache
  • ******
  • Posts: 4867
  • Location: The Garden Path
Re: Next state to stop Income Tax?
« Reply #2 on: June 05, 2017, 09:47:01 AM »
Won't your property taxes, sales tax, etc be higher in a state with no income tax? They have to get money from somewhere. I think in FIRE a state with higher income tax would be better because of lower sales and property taxes, as well as better infrastructure. I am a bit sceptical of the tax rate/ growth correlation, because you need good schools and roads to draw in new people. I guess low/ no income tax would be good if you had a really high income, no kids, and didn't own a home.
« Last Edit: June 05, 2017, 09:50:01 AM by MrsWolfeRN »

Lepetitange3

  • Guest
Re: Next state to stop Income Tax?
« Reply #3 on: June 05, 2017, 09:49:07 AM »
Florida has no income tax.  Our property taxes are also fairly low.  If you're already retired it's even better in terms of the way taxes play out.  Sales tax is no greater than when I lived in VA or MA.  Most money seems to come from tourism.

startbyservingothers

  • Stubble
  • **
  • Posts: 109
  • Location: Lexington, Kentucky
    • A Full Year
Re: Next state to stop Income Tax?
« Reply #4 on: June 05, 2017, 12:07:59 PM »
Money has to come from somewhere.  Just like FI that means either having really low expenses or high income.  Thus the trend is obviously states with either natural resources or tourism to tax.  And line that up politically as well.  A Republican state may be a little more likely to pass, but isn't absolute depending on how large the income side is.  Another data point may be how much tax they are charging currently.   Sounds like anyone's guess is as good as mine.  To throw a couple random guesses I'll say Colorado (increase in tourism due to Green Leaves.) or North Dakota (Tax Rate already low.)

It will of course effect people differently, but keep in mind that some states with no income tax have less entitlements and/or services.  No state income tax is essentially a "Tax break for the wealthy"  at the expense of the poor.  -  How each person interprets that will of course differ.

I have some interest in considering a No Income Tax state.  You have an interesting take on that alone would encourage growth.  I see it as more of a chicken / Egg theory.  I.e.  You can only have no income tax if you have other income / growth.  So if a state has No Income Tax, is the growth due to the natural ability the state already had or due to that particular law?  (I'm sure there are some studies about this, but I haven't researched them.)

Paul der Krake

  • Walrus Stache
  • *******
  • Posts: 5854
  • Age: 16
  • Location: UTC-10:00
Re: Next state to stop Income Tax?
« Reply #5 on: June 05, 2017, 09:49:42 PM »
I have no idea, but I would assume more states would trend to implementing or increasing state income tax with all of the federal budget cuts coming.  Hasn't it been rumored for awhile that WA will implement an income tax?
There is some noise in the mayoral race in Seattle for a city income tax. My understanding is that it's basically dead in the water. It's guaranteed to be immediately challenged in court and would require a change in the state constitution, or at the very least a change in its current interpretation. Proponents want to tax income above $250k at around 1%, but even if the State was somehow okay with it there's no way to enforce it unless you make it a payroll tax.

Never say never, but right now it's a fringe proposal with no real traction.

Paul der Krake

  • Walrus Stache
  • *******
  • Posts: 5854
  • Age: 16
  • Location: UTC-10:00
Re: Next state to stop Income Tax?
« Reply #6 on: June 05, 2017, 10:06:21 PM »
Also, states and municipalities have many revenue streams. People think mostly of property, personal income tax, and sales tax because these are the ones that are most visible.

There are also excise and specialty taxes. Cigarettes, alcohol, gasoline, marijuana, guns. Hotel taxes. Parking taxes. Port and airport levies. Taxes on specific occupations. Taxes on hospitals. Toll roads and bridges. Business taxes. Special temporary taxes levied to fund a specific project. Land leases/sales to private enterprises.

And then you can also adjust the spending side of the equation. Just because the State next door subsidizes something doesn't mean you have to. There are many levers to adjust to get to the desired budget.


Hash Brown

  • Stubble
  • **
  • Posts: 213
Re: Next state to stop Income Tax?
« Reply #7 on: June 20, 2017, 08:49:08 AM »
States without income taxes tend to have tax structures that are regressive.  For example, Tennessee has no income tax but has a very high sales tax that includes the taxation of groceries. 

The whole Tea Party bit about the Southern "Right to Work" states attracting employers from the north with "low taxes" isn't true -- it's low taxation for ownership and high income earners. 


Rubic

  • Handlebar Stache
  • *****
  • Posts: 1130
Re: Next state to stop Income Tax?
« Reply #8 on: June 20, 2017, 09:22:20 AM »
States without income taxes tend to have tax structures that are regressive.  For example, Tennessee
has no income tax but has a very high sales tax that includes the taxation of groceries. 

Tennessee also has the "Hall Tax", a state tax on interest and dividend income from investments.

https://en.wikipedia.org/wiki/Hall_income_tax

Currently 5% on taxable interest and dividend income over $1250 ($2500 married).
It's gradually being phased out.

I would like to see an exemption of sales tax on groceries, but it's unlikely.

Hash Brown

  • Stubble
  • **
  • Posts: 213
Re: Next state to stop Income Tax?
« Reply #9 on: June 20, 2017, 09:55:10 AM »
The main thing people don't understand about "state" taxes is that the relationship between states and their localities differ from state to state.  So a state with low "state" taxes usually has higher local taxes to compensate. 

The one really big difference between states is the existence or non-existence of municipal earnings taxes.  New York City has a municipal earnings tax but Chicago and Los Angeles do not -- hence the higher sales taxes in the country's #2 and #3 cities. 

"High Tax" Ohio has a state income tax and municipal earnings taxes in all of its cities ranging between 1% and 2.5%, but it has relatively low property taxes as compared to the cities in "Low Tax" Texas.   

 

Wow, a phone plan for fifteen bucks!